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Residual Seasonality in GDP Growth Remains after Latest BEA Improvements

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  • Victoria Consolvo
  • Kurt Graden Lunsford

Abstract

Measuring economic growth is complicated by seasonality, the regular fluctuation in economic activity that depends on the season of the year. The BEA uses statistical techniques to remove seasonality from its estimates of GDP, but some research has indicated that seasonality remains. As a result, the BEA began a three-phase plan in 2015 to improve its seasonal-adjustment techniques, and in July 2018, it completed phase 3. Our analysis indicates that even after these latest improvements by the BEA, residual seasonality in GDP growth remains. On average, this residual seasonality makes GDP growth appear to be slower in the first quarter of the year and more rapid in the second quarter of the year. Rapid second-quarter growth is particularly noticeable in recent years. As a result, business economists and policymakers may want to take seasonality into account when using GDP to assess the health of the economy.

Suggested Citation

  • Victoria Consolvo & Kurt Graden Lunsford, 2019. "Residual Seasonality in GDP Growth Remains after Latest BEA Improvements," Economic Commentary, Federal Reserve Bank of Cleveland, issue April.
    • Handle: RePEc:fip:fedcec:00097
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    1. Kurt Graden Lunsford, 2017. "Lingering Residual Seasonality in GDP Growth," Economic Commentary, Federal Reserve Bank of Cleveland, issue March.
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    Cited by:

    1. Daniel Aaronson & Scott A. Brave & Michael Fogarty & Ezra Karger & Spencer D. Krane, 2021. "Tracking U.S. Consumers in Real Time with a New Weekly Index of Retail Trade," Working Paper Series WP-2021-05, Federal Reserve Bank of Chicago, revised 18 Jun 2021.

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    Keywords

    Gross Domestic Product; measurement;

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